Quick Facts

Saint Vincent and the Grenadines’ economic freedom score is 68.0, making its economy the 44th freest in the 2015 Index. Its score is 1.0 point higher than last year, with improvements in half of the 10 economic freedoms, led by investment freedom, the management of government spending, and monetary freedom, that outweigh a decline in business freedom. Saint Vincent and the Grenadines is ranked 6th out of 29 countries in the South and Central America/Caribbean region, and its score is above the world and regional averages.

Over the past five years, economic freedom in Saint Vincent and the Grenadines has advanced by 1.1 points, a result of increases in five of the 10 economic freedoms. Leading the way have been impressive gains in both government spending and investment freedom, each of which has advanced by double digits.

Despite duty-free access to the U.S. market, Saint Vincent and the Grenadines’ trade and investment regimes remain relatively closed. High tariff rates discourage imports and protect inefficient domestic businesses. Licensing is required for businesses with majority foreign ownership. The economy is vulnerable to global price fluctuations, particularly prices of petroleum products, and drug-related corruption and money-laundering charges have held back development of the islands’ legitimate financial sector.

Background

Prime Minister Ralph Gonsalves’ Unity Labour Party retained a slim majority in the December 2010 parliamentary elections. Saint Vincent and the Grenadines is a parliamentary democracy. It is a member of the Caribbean Community (CARICOM) and the Organization of Eastern Caribbean States. The export sector benefits from the Caribbean Basin Initiative, which provides duty-free access to the U.S. market. Agriculture and tourism employ a significant portion of the workforce, but high formal-sector unemployment has caused many to emigrate. Public debt has been growing, and weak recovery in the tourism and construction sectors has limited economic growth.

The rule of law remains strong for the region, and corruption is not pervasive. There have been some allegations of money laundering through Saint Vincent banks and drug-related corruption within the government and police, but the government has taken action to prosecute such crimes. The relatively independent and efficient judicial system is based on British common law.

The top individual and corporate income tax rates are 32.5 percent. Other taxes include a value-added tax and a property tax. The overall tax burden amounts to 23 percent of domestic production. Government expenditures are equal to 28.7 percent of the domestic economy, and public debt is equivalent to approximately 76 percent of gross domestic product.

Establishing a business is generally not burdensome or costly. There is no minimum capital requirement, and it takes seven procedures to start a business, but licensing procedures can be time-consuming. Labor regulations are flexible, but application of labor laws is uneven. Subsidy programs benefit agricultural products such as bananas and state-owned enterprises such as a coconut water bottling plant.

Saint Vincent and the Grenadines’ average tariff rate is 10.8 percent. Agricultural imports face relatively high tariffs. Foreign and domestic investors are generally treated equally under the law. The financial sector is underdeveloped and dominated by banks. A considerable portion of the population does not use the formal banking sector, and access to financing is limited for potential entrepreneurs.